Supply is not going up. Fed needs to cut rates and bring down mortgages in order for the supply to meaningfully increase.
Honestly the only thing to fix housing market would be a recession. A recession would bring with it lower mortgage rates which will open up some inventory (right now lower mortgage rates are key to more supply) but also limit some of the crazy demand on the sidelines that would come with lower rates.
A 5% unemployment rate and a 4.5-5% mortgage rate would get the market more two way.
A 5% unemployment rate and a 4.5-5% mortgage rate would get the market more two way.
You don't need a recession to bring rates down. High inflation is already gone. The Fed just needs to cut interest rates down to neutral (which is around 3%). That would do the trick.
It would have to be a deep recession. When you factor in severance plus people having mortgage rates in the 2.0-3.5% range, mortgage payments will likely be serviced without issue for at least 12 months.
Existing homeowners are not selling until mortgages get below 5%. Pretty simple. The Fed screwed this up and only they can fix it.
Anecdotally, based on folks I work with, return to the office seems to be having an impact on housing decisions. I know a few people that were looking to move down the shore that now put their plans on hold because we’ve been summoned back to the office 3 days a week. Also, everyone that has been living abroad is coming back. I’m wondering if return to work could actually move the needle on housing if more companies squash WFH.
This will have an impact on shore or typical 2nd home locations.
First time buyers getting gifts is at 53% YTD for the builder I work for. So far YTD we have settled over 150 first time buyers this year (4 states).
It’s crazy. More or less what’s happening is millennials don’t want to put life on hold and their parents are essentially gifting them their inheritance early. I’ve also seen ‘House funds’ that parents set up for their kids similar to a college fund if you will.
Now here’s the insane part, even with an $100k gift from their parents mortgages are still $3k+….. oh no no
And to be honest (not to get on my soapbox), it’s those same parents fault that their kids are in that situation by privatizing everything, keeping the rate entirely too low for entirely too long simply to raise their own personal finances with no foresight on the future…
We all know the person who bought whatever property for 150k in 1992 that’s worth 750k today
It would probably make certain suburbs a little softer. Like Sussex County for example that went on an absolute tear during COVID.
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anon_0k9zlfz6lz9oy
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Housing isnt treated like a stock. 1-4 family that is. Alot of wall street/corporate guys cant comprehend this. Theyve been saying it for 10 years.
Why would existing homeowner sell...sure they will more than likely get over asking but at the same time they will over pay for their new house at a higher rate. You cant even rent for awhile as the rent is thru the roof. The interest rates are nothing compared to the 80's what were like 16-18%
I keep hearing about these kids that are getting "housing gifts" from their parents, and it amazes me. Not in a bad way; actually, I'm kind of jealous my wife and I had to pay for everything ourselves. 20 % down payment, couldn't have any debt, PMI out the ass if no 20 % back in 2012.
While we'll certainly help our daughter out with college and wedding, unless we're deceased by the time she buys a house, I can't imagine doing that for a house.
Now granted, we're pretty old school, and I'm not judging people any stretch. Houses and interest rates were cheaper 11 years ago when we bought.
Is it:
1. People are wealthy
2. Taking money out of wedding allotment and giving down payment
3. The "your getting this when we die anyway, so since rates are crazy and home prices insane, take it now so you don't get crushed"
Genuinely interested here, as the only thing we have set up is a 529. Our daughter is 8, and we don't have a wedding or a home fund for her (nor do I think we'd set that up yet), and both of our parents are still alive, so there's been no inheritances (yet)
While we'll certainly help our daughter out with college and wedding, unless we're deceased by the time she buys a house, I can't imagine doing that for a house.
Now granted, we're pretty old school, and I'm not judging people any stretch. Houses and interest rates were cheaper 11 years ago when we bought.
Is it:
1. People are wealthy
2. Taking money out of wedding allotment and giving down payment
3. The "your getting this when we die anyway, so since rates are crazy and home prices insane, take it now so you don't get crushed"
Genuinely interested here, as the only thing we have set up is a 529. Our daughter is 8, and we don't have a wedding or a home fund for her (nor do I think we'd set that up yet), and both of our parents are still alive, so there's been no inheritances (yet)
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anon_0k9zlfz6lz9oy
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Wealth transfer. Boomers gave incredibly healthy balances sheets. My father died in debt so i got nothing when he passed and i pay my moms mortgage so i wont get anything until she passes, and itll be the house. Hopefully thats a long time off
That's what I'm saying
Did most boomers who either died, or are still alive, have boatloads of money?
I expect a modest inheritance when that time comes, but nowhere near the amount of $ some of these kids are getting
If you have the money, why wait for your death to pass it on. In our family, we are somewhat frugal compare to how some on the board spend money. Our parent paid for all the kids college education, weddings and gave money for down payment. When we were growing up, we never went on vacation, and barely had any toys growing up, my parents lived thru the depression so they saved. When my dad passed, we received a decent inheritance. My siblings and I are cost conscious and we saved but not as frugal as our parents. We have enough to give to the kids now instead of when we pass away.
Maybe the next generation will be rich enough, that giving a million dollar to the kids in their 20’s wouldn’t be unusual.
I’m a boomers, all the kids will inherit a couple of millions and the kids are doing better than their parents. Hopefully, the money is only a safety net and will continue to be passed on to the next generation. They are mostly Rutgers graduates. There are many on the board doing as well base on their postings.
Yeah I agree that's a wise move especially in light of today's housing conditions w/prices and rates
I'm just imaging how that would go w/my parents
"Hey could you do me a solid and break me off w/100k now, and deduct that from the balance later?"
I'd imagine it's mostly the parents though that have the foresight to do it w/out being prompted
I think that's they key - generational wealth
I had a buddy in hs who's grandparents paid for his college
At 18, I was amazed that was even possible
Mine were great but came from Italy w/nothing, and didn't pass away with much after having 7 kids
Doing this gradually can help lower taxes. Lots of families are taking advantage of this.
I took a 15k loan out of my 401 to get to 20% sucked it up for 5 yrs to avoid the PMI.
It's usually the taxes that make or break you buy I cant imagine paying 16-18% interest that's insane. By the time you pay off the house you paid more in interest than the house is worth. Granted I think the rate dropped to like 10 or 11% by end of 80's but still double digits....and that was with good credit. Wonder what the rates were if you were like 550-600
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anon_0k9zlfz6lz9oy
Guest
I see buyers getting upwards of $500K towards downpayments. I'm sure others have seen higher. Sold a house for $850K, buyers were gifted a $500K downpayment. Hey, I mean good for them but I do feel bad for the first time homebuyers not in that position. For them it's incredibly tough here in NJ in the top suburban towns
The absolute level of rates is less important than the change and speed of that change. Normally, high rates would cause home prices to drop so everything balances out. However, the dumbass Fed went from 0% to over 5% in a blink of an eye. Mortgage rates went from all time lows to 30 year highs in a matter of months. That's why there is no supply on the market of existing homes. No supply means home prices aren't going down to accommodate higher rates as usual.
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anon_0k9zlfz6lz9oy
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Yup. I took out loans for college as well. Graduated with $55K in student debt. Worked throughout college to pay for food, car, entertainment $ and my off campus rent.
I kinda lean towards making my kids take out loans too. TBH it motivated me and kept me accountable to earn as soon as I graduated. I paid them off in full within about 1 year.
I
We'll be sending our daughter to parochial middle and high school - that'll be ~100k
The expectation is she work hard, study, be respectful, hold down a job, do extracurical activties (Sports, music, etc) and either go to college, military, trade school, etc.
Not coming from money, and not having endless amounts now, yet showing kids what my father refreed to as "the other side" isn't a bad thing, as long as they know what it takes to get to that other side, and more importanty, stay there
I think a good mixture of both (gifts and accountability) is a good way to look at it
We'll be sending our daughter to parochial middle and high school - that'll be ~100k
The expectation is she work hard, study, be respectful, hold down a job, do extracurical activties (Sports, music, etc) and either go to college, military, trade school, etc.
Not coming from money, and not having endless amounts now, yet showing kids what my father refreed to as "the other side" isn't a bad thing, as long as they know what it takes to get to that other side, and more importanty, stay there
Sure, and when my parents were paying about 18% on their mortgage in the 80s the house they bought in Morris County was $105K. That same house is now $600K at 8%. So mortgage rate is basically half but cost of the same house is 6X. I won’t get into the household income numbers because I recognize that’s a factor but affordability is a complete disaster right now.
I was one of 5 and my parents were/are the greatest parents anyone could ever have. They did everything they could for us, but they could never have given me the money I am able to provide my daughter.
I think that it was easier for my parent and my generation, baby boomers, to accumulate wealth. Housing and the stock market increased significantly over the years especially the last 14 years after 2008 since interest rates continue to decrease over this period. I don’t know if assets, houses and stocks, will continue to increase in the future at the previous rates. Even Buffett mentioned that the good times are over and it will be tougher going in the future.
I grew up in Paterson on River Street in the ghetto and thought we were poor when we were younger base on parent spending habits. We did move to the suburbs when I was ten. We did well because I hated being poor and wanted to buy things that other people had. Kids in the suburbs would make fun of my clothing since I worn them more frequently.
My parents bought our family home for $15,200 1964
Mortgage was $91.09 a month. Imagine that.
Never got any gift for housing. Worked my ass off for everything I have built. I understand why people do it but at the same time I don't know how I feel about it. You don't want to enable bad behavior with your kids. If they're hard workers and need some help, I get it. The people I see getting it were living at home, blowing their paycheck and then couldn't afford a house.
Idk what I will do when that time comes. My kids will be very well off, maybe I'll just give it all to Rutgers. I was born with nothing, I'll die that way.
Idk what I will do when that time comes. My kids will be very well off, maybe I'll just give it all to Rutgers. I was born with nothing, I'll die that way.
Yeah that sounds about right . And that doesn’t sound that bad considering the market.
If someone buys a $400k house (which lets be honest in NJ isn’t getting you anything great) and puts a decent down payment of $100k down , the mortgage payment alone is about $2k …taxes and insurance makes it in the $3k range .
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